Monday, July 25, 2011

What I Would I Do If I Were Murdoch

For those readers who have been out of the news loop for the past few weeks, media mogul Rupert Murdoch shut down News of the World — his highly successful U.K. tabloid with a paid circulation of nearly three million — because of widespread public outrage over revelations of phone hacking, political corruption and bribery. The scandal has reached a point where it could bring down the government of Conservative Prime Minister David Cameron.

Investigations are ongoing. Murdoch and his huge media empire are clearly in trouble. Editors and Scotland Yard leadership have resigned and/or been arrested. Murdoch claimed in his recent parliamentary testimony that he had no knowledge of the hacking. An editorial in the Murdoch-owned Wall Street Journal was clearly intended to stop the reputational cancer by saying that the issues in London do not extend to Murdoch's other holdings.

Trust, which is the fundamental value that holds all businesses and their stakeholders together, is the central issue. The trust factor, in particular, impacts corporate governance and shareholder and public support. The violation of that trust could bring down Murdoch's entire global empire.

Murdoch has already taken certain actions: the company ran full-page ads across the U.K. saying, “We are sorry”; apologized to the family of a murdered teenager whose phone had been hacked; and stopped paying the legal fees of a former consultant who admitted hacking the phones of the royal family. (This tells you where this guy's head is at and reinforces the dishonesty in his parliamentary testimony when he said he was unaware of the hacking — his son, James, forthrightly admitted knowledge of the hacking.)

But poor timing has undermined Murdoch’s actions to date. That’s why they’ve had the impact of a feather pillow. He’s consistently been slow and reactive: he dallied on Rebekah Brooks, parting ways only when the outcry against her became deafening. He publicly apologized only when outrage had crested. He now appears to be waiting too long to deal with his son James. This all creates the image of a man moving reluctantly in response to public outrage, taking piecemeal measures, rather than acting resolutely based on a strong internal moral compass. In short, Murdoch needs to get out in front of events. One of the fundamental rules of crisis communications is act decisively and rapidly. That is the only way to begin rebuilding reputation.

So what are the actions I would advise Murdoch to take or the strategies I’d recommend he implement?

First, he should hunker down and cooperate with all authorities while initiating important changes in the way he does business. Right now, this is a firestorm in a heat wave — not unlike many others I have seen. Even though this one could take the Murdoch empire under, News Corp. may be too big to fail. In a spotty economy where jobs are at a premium, major governments are not going to want to be seen to be obliterating tens of thousands of them. Thus, if Murdoch proceeds strategically, as well as waiting out the storm, he might just pull through.

Here are some other thoughts:

• Everybody and anybody who played even a marginal role in the scandal needs to be replaced and those involved punished.. Murdoch should step aside as day-to-day leader and install a seasoned executive in his place. He can continue to exercise some control in a consulting or board position. Because of his central role in this messy corrupt enterprise, this is the time to separate his son from the family business. James, it appears, knowingly and secretly approved a $1.4 million settlement of a hacker victim's suit. Can you imagine a son not reporting this to his father … his boss?

• As head of the organization, Murdoch should take the blame for all the wrongdoings, even if he was not involved in the least. He has built an image of a "one-man" company, so how can he expect to sustain credibility if he claims to be unaware of events as critical as these? Further, he is reputed to be a micromanager and with a scandal whose roots go back several years, it is unlikely that he was unaware of the hacking or the fact that his team, the government and the police were in cahoots. As a result, virtually no one believes his protestations of innocence.

• Murdoch needs to establish a widely publicized code of ethics for all of his companies--and then have extensive training programs to make sure all employees adhere to the code. An Ethics Leader needs to be appointed to monitor the program.

• Murdoch should run new, carefully crafted apology ads in every key market where he has holdings — in all newspapers, on TV and any other relevant channels. He should also create a video message for Facebook, YouTube and all other appropriate social media platforms. What he needs right now is third-party endorsement. If he does the right things, other media and influencers may praise his actions.

• Avoid running defensive editorials in Murdoch-owned properties. Rather focus on proactive steps Murdoch is taking to resolve the situation.

• The weekend before it ceased publication, the News of the World announced that all the profits from its last edition would be donated to “good causes” and advertising space would be given to charities. It was a case of “too little, too late.” Until this thing plays out, any philanthropic or charitable endeavor by Murdoch will be viewed with skepticism.

• When things cool off a bit and, if the lawyers permit, Murdoch might sponsor an op-ed program, on the challenges faced by the media today, which may remind the public of the knowledge advantage Murdoch brings and the positive force he can be in defining and shaping future strategies for the Fourth Estate.

• Following the pie-in-the-face incident, his attractive —and protective — wife, Wendi Deng, who deflected the attack, has become something of an item. Having her accompany him at all his personal appearances may enhance his likeability factor.

All of the above may or may not save Murdoch, as there is a great deal of schadenfreude pleasure in contemplating Murdoch’s current misfortunes) out there. But as noted above, he has the power to bestow jobs in a jobless economic "recovery." And that’s a distinct, powerful and persuasive advantage to have in your corner these days.

3 Comments:

John Scheibel said...

I agree with most of your comments, especially the point about the fundamentals of "trust".

However, in the midst of all this hoopla, I am bothered by why the "media" is so (rightfully) upset about this, but did not demonstrate one-tenth the outrage towards Ted Turner during the CNN/Iraq bribery controversy a decade ago.

I don't want to be a cynic, but I can only presume that there may be a tinge of political bias seeping in here.

Excellent! I believe, however, that Murdock is an old duck used to conducting business the old way. Transparency is not in his system. If I were Murdock, I would step aside and I would separate my son from the business entirely. Apologies are in place, but too late.